Should You Invest In Bharat 22 ETF? Here’s What Financial Advisers Say

The second follow-on offer of Bharat 22 Exchange Traded Fund or Bharat 22 ETF—a passively managed mutual fund scheme whose portfolio maps with the Bharat 22 Index—opened for subscription today.India plans to raise an additional Rs 3,500 crore through this offering managed by ICICI Prudential Asset Management Co. Ltd., the nation’s largest asset manager. Investors will get a 5 percent discount on the reference price, which is the volume weighted average price of the fund’s constituents on the offer date. The minimum investment amount in the scheme—which has no entry or exit load—is Rs 5,000.The government had in November 2017 launched Bharat-22 ETF comprising shares of 22 companies, including public-sector undertakings, state-run banks, ITC Ltd., Axis Bank Ltd. and Larsen & Toubro Ltd. State-run companies like Oil and Natural Gas Corp., Indian Oil Corporation Ltd., State Bank of India, Bharat Petroleum Corp. Ltd., Coal India Ltd. and National Aluminium Company Ltd. are part of the new Bharat ETF-22.The fund has, however, declined nearly 10 percent over the past year compared with the Nifty 50 Index’s 2.55 percent gain.Here's What Investment Advisors Think About Bharat-22 ETF:Harshvardhan Roongta of Roongta SecuritiesThe principal-financial planner at Roongta Securities advised against investing in the fund. “There is nothing extraordinary or appealing about this scheme,” he said. “There have been similar schemes previously that have not done too well.”Roongta said two factors need examination:Cost: This scheme is low on cost but we have better options like interest funds and other ETFs that are less restrictive.Discount on NAV: This should not be the reason for one to invest in this scheme as a long-term perspective is necessary.Tarun Birani of thinkingman.inThe founder of the investment advisory firm said retail investors must skip the scheme as there are better diversified options available in the market. “Why should one get into so much exposure to public-sector which we know from their past performances aren’t great companies?” he asked. “Instead go for other schemes given the current volatility and corrections in the markets.”Amol Joshi of Plan Rupee Investment ServicesThe founder of the investment advisory said that while Bharat-22 ETF is a good scheme for the long-term, there are alternatives. “It’s a fund that has its own benchmark. In other words, the fund is not aligned to any specific mainstream benchmark but is a construct of stocks identified for diluting government’s stake,” Joshi said, adding that diversified funds make sense for investors over medium to long-term. “The discount makes the offering attractive but would be more suitable for a short-term investor and hence shouldn’t be a deciding factor for a long-term investor.”

Should You Invest In Bharat 22 ETF? Here’s What Financial Advisers Say

The second follow-on offer of Bharat 22 Exchange Traded Fund or Bharat 22 ETF opened for subscription today.

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Should You Invest In Bharat 22 ETF? Here’s What Financial Advisers Say

The second follow-on offer of Bharat 22 Exchange Traded Fund or Bharat 22 ETF opened for subscription today.

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